Mortgage rates have had a spectacular 2022.
After a few years of rates near record lows – around 3% or less for a 30-year fixed rate – averages have roughly doubled since January. Inflation is the main reason for this, and rates have risen as the Federal Reserve has raised interest rates to bring these high prices under control.
Rising mortgage rates cooled a booming housing market. Home prices have started to decline since the beginning of the summer and are falling faster in some communities. Unfortunately, these higher rates also mean that monthly payments will likely be much higher. Run today’s mortgage rates using a calculator and give yourself plenty of wiggle room as rates change quickly.
Let’s look at today’s rates and what they mean for borrowers.
A number of major mortgage rates all climbed higher today. Both 30-year and 15-year fixed mortgage rates have increased. The most common type of adjustable rate mortgage is the 5/1 Adjustable Rate Mortgage (ARM) also climbed.
The average mortgage rates are as follows:
Mortgage rate forecasting: why do mortgage rates change?
Inflation has been high this year, with the consumer price index standing at 8.2% year-on-year in September. That was down from August’s 8.3%, but still higher than expected. High inflation has prompted the Federal Reserve to raise its key rate several times this year, most recently by 0.75 percentage points in September.
These factors have both pushed mortgage rates up this year, from around 3.3% in January to over 6% at the end of September.
“Inflation is absolutely in the driver’s seat, especially when it comes to mortgage rates. Until we get lasting evidence that inflation is starting to ease, upward pressure on mortgage rates will persist,” said Odeta Kushi, deputy chief economist at First American Financial Corporation.
Current Mortgage Rates: Is It a Good Time to Buy a Home Right Now?
The sharp increase in mortgage rates this year has driven many potential buyers out of the market. This could present opportunities for you – if you can afford the higher cost of borrowing money.
Homebuyers face less competition and prices are down from their all-time highs earlier this year, but are still high. If you can find a deal that you can afford, it can still be a good opportunity. After all, no one knows what mortgage rates and prices will look like next year, and buying a home is a lifestyle decision, not just a financial one.
“It’s always a good time to buy a house, if that’s what matters to you. It’s just about doing your research and making good, informed decisions,” says Eileen Derks, mortgage manager at Laurel Road, a KeyBank-owned online lender that specializes in serving healthcare professionals.
What to know about loan fees
The umbrella term for what you pay to take out a mortgage is closing costs. Everything from prepaid property taxes to your appraisal fees falls into this category. Typically, closing costs range from 3% to 6% of your loan amount. So the higher your mortgage, the more money you will pay. Keeping track of your closing costs is crucial because a higher closing cost will translate into a higher APR.
Current Mortgage Refinance Rates
Refinancing has become a little more expensive today as 30-year and 15-year fixed refinance mortgages have seen their average rates increase. Shorter-term 10-year fixed rate refinance mortgages also increased.
The refinancing averages for 30-year, 15-year and 10-year loans are:
30-year mortgage rates
The median interest rate for a standard, 30-year fixed mortgage is 7.30%, a growth of 12 basis points compared to the previous week.
15-year fixed mortgage interest rate
The median rate for a 15-year fixed mortgage is 6.44%, an increase of 9 basis points from a week ago.
The monthly payment on a 15-year fixed rate mortgage is higher than what you would pay on a 30-year mortgage. However, 15-year loans have significant advantages: you’ll save thousands of dollars in interest and pay off your loan much faster.
5/1 Adjustable Rate Mortgage Rates
A ARM 5/1 has an average rate of 5.48%, an increase of 8 basis points compared to the same period last week.
An ARM is ideal for households that will sell or refinance before the rate changes. If not, their interest rates could end up being significantly higher after a rate adjustment.
For the first five years, a 5/1 ARM will typically have a lower interest rate than a 30-year fixed mortgage. Keep in mind that your payment could end up being several hundred dollars higher after a rate adjustment, depending on the terms of your loan.
How our mortgage interest rates are calculated
We use daily mortgage interest rate data from Bankrate for our mortgage rate trends. These overnight rates are based on a specific personal profile, which only includes loans for single-family homes with a loan-to-value ratio of 80% or higher. Bankrate is part of the same parent company as NextAdvisor.
Average rates given below and based on the Bankrate Mortgage Rate Survey:
Updated October 25, 2022.
Frequently Asked Questions (FAQ) About Mortgage Rates:
How to get the lowest mortgage rate?
Getting loan offers from a few lenders is a great way to get the lowest interest rate.
The mortgage rate you get depends on a variety of factors that lenders take into account when assessing the risk of lending you money to buy a home. Your credit score is factored into the decision. And even the value of the property relative to your mortgage balance matters. So putting more money into your down payment can lower your mortgage interest rate.
But lenders will look at your situation differently. Thus, you can give the same documentation to three different banks, and obtain offers with three different mortgage rates and equally variable fees.
Is it a good idea to lock in my mortgage rate now?
Mortgage rates go up and down daily, and it’s impossible to time the market. It is therefore wise to lock in your interest rate now, because overall rates are historically favorable.
A rate lock will only last for a certain amount of time, usually 30 to 60 days. If you have a problem with closing and it looks like your foreclosure rate is expiring, you should contact your lender. They may be able to extend the rate lock, however, you may need to pay a fee for this privilege.